Vladimir Putin named the key conditions for the development of small and medium business

10th April 2015

A meeting of the State Council on the development of small and medium business chaired by Vladimir Putin took place in the Kremlin.

In his speech, Russian President noted that the development of small and medium business is the key condition for economic renewal and increasing stability.

“Small and medium companies due to their mobility and flexibility can quickly occupy demanded market niches, create new economic growth points, contribute to the effective improvement of the economy, its efficiency, solve employment problems. Private enterprise increasingly manifests itself in the social sphere”, - said Vladimir Putin.

At the same time, according to him, small and medium business is still developing slowly. Its contribution to the GDP does not exceed 21percent.

“You all know that in comparison to other countries with developed economies, where this contribution is 50 percent or more, in Russia the share of SMEs is 21 percent.Share in the total turnover of services – only 25 percent.The index for investment in fixed assets is extremely low – only 6 percent of their volume in the whole country. We see that people do not rush to open their own business. So, now only about 6 percent of citizens are budding entrepreneurs and new business owners”, - he said.

According to him, now young people prefer working for the civil service, local government or large companies with state participation. Moreover, there is a tendency towards an out flow of workers from small and medium enterprises. Experts say there is a growth of employment in the informal sector of the economy.

“We need extensive measures affecting all medium and small companies, which can provide real support and unconditional encouragement of private business initiative”, - said the President.

“Creating a favorable business environment in each region and municipality in Russia is the key condition for the development of small and medium business” - he said.

He urged the leaders of the Russian Federation subjects to do their best to address this problem, encourage their teams to work productively and “do not dismiss this issue as something of a minor importance”.

According to surveys, a significant number of companies still consider administrative barriers to be a heavy burden, which is very hard to bear. It still remains difficult for entrepreneurs to access infrastructure resources. “Entrepreneurs go to bureaucratic offices and beg for things that should be provided to them without any barriers. As a result, business is not developing and business initiative fades away” - he resents.

“It is necessary to give freedom to citizens to fulfil their potential, support their desire to improve their own lives and benefit to the country”, - said Putin.

In his opinion it is necessary to solve these problems in close partnership with business, media, political parties and non-governmental associations. “A significant increase in the share of small and medium enterprises in the economy and creation of new jobs in this sector should become the result of our joint efforts. Now nearly 18 million people work in SMEs sector. I think that over the next five years we have all the capabilities to ensure a significant increase in the share of small and medium business in the economy” - said the President.